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Tuesday, August 30, 2016

Trump and Red-Lining — and Clinton's Racism Claim

Comment: "Redlining" is defined as refusing a loan or
insurance to someone because they live in an area deemed to be a poor financial
risk. This was a very common practice 40 years ago. Banks "redlined"
minority communities for the purpose of home mortgages because of the
disproportion number of defaults on their loans. Black business people and black
bankers also relined. Banks imposed restrictions on potential investors before
making them real estate loans.

"Reverse redlining" is a variation, where banks target parts of a
city with significant minority populations in order to sell them costly
sub-prime mortgages, even if they can afford cheaper prime mortgages. Hillary
Clinton supported bailing out the banks who participated in this activity —
those who committed fraud by selling bogus securities that were bundled
mortgages (and auto loans) which were in or near default (known as credit
default swaps or "derivatives) which were fraudulently rated
"AAA" by Moody's and other credit agencies.

In 1994, Barack Obama was one of the plaintiffs in a class action lawsuit,
alleging that Citibank had engaged in practices that discriminated against
minorities. The lawsuit forced the bank to ease its lending practices. The Daily
Caller reported:

President Barack Obama was a pioneering contributor to the national
subprime real estate bubble, and roughly half of the 186 African-American
clients in his landmark 1995 mortgage discrimination lawsuit against Citibank
have since gone bankrupt or received foreclosure notices ... Obama has pursued
the same top-down mortgage lending policies in the White House ... Obama’s
lawsuit was one element of a national “anti-redlining” campaign led by
Chicago’s progressive groups, who argued that banks unfairly refused to lend
money to people living within so-called “redlines” around African-American
communities. The campaign was powered by progressives’ moral claim that
their expertise could boost home ownership among the United States’ most
disadvantaged minority, African-Americans.

Then we had the housing crash when prices began declining in 2006 and lasted
almost 9 years. Obama's AG Eric Holder refused to prosecute a single banker,
even though the banks were eventually fined billions of dollars for their
illegal, unethical and fraudulent activities. Other than Obama, Hillary Clinton
has taken more money from the bankers than anyone else — by way of campaign
contributions, through fundraisers, in donations to her foundation and in paid
speeches.

It was Hillary Clinton's husband who helped deregulate the banks in 1999 that
allowed these banks to engage in this criminal activity — so she should be the
LAST person to complain of Trump's real estate investment practices. While this
post is not to exonerate Trump from his past practices, it was very widespread
and very common 40 years ago. Maybe Trump has "evolved" since then,
just as Clinton has on a variety of issues, such as her husband's crime bill,
private prisons and welfare reform (etc).

Begin Post: Although informal discrimination and segregation had
existed in the United States, the specific practice called "redlining"
began with the National Housing Act of 1934, which established the Federal
Housing Administration (FHA). Racial segregation and discrimination against
minorities and minority communities pre-existed this policy. The implementation
of this federal policy aggravated the decay of minority inner city neighborhoods
caused by the withholding of mortgage capital, and made it even more difficult
for neighborhoods to attract and retain families able to purchase homes.

In 1935, the Federal Home Loan Bank Board (FHLBB) asked Home Owners' Loan
Corporation (HOLC) to look at 239 cities and create "residential security
maps" to indicate the level of security for real-estate investments in each
surveyed city. The assumptions in redlining resulted in a large increase in
residential racial segregation and urban decay in the United States. Urban
planning historians theorize that the maps were used by private and public
entities for years afterwards to deny loans to people in black communities. But,
recent research has indicated that the HOLC did not redline in its own lending
activities, and that the racist language reflected the bias of the private
sector and experts hired to conduct the appraisals.

On the maps, the newest areas—those considered desirable for lending
purposes—were outlined in green and known as "Type A". These were
typically affluent suburbs on the outskirts of cities. "Type B"
neighborhoods, outlined in blue, were considered "Still Desirable",
whereas older "Type C" were labeled "Declining" and outlined
in yellow. "Type D" neighborhoods were outlined in red and were
considered the most risky for mortgage support. These neighborhoods tended to be
the older districts in the center of cities; often they were also black
neighborhoods.

Some redlined maps were also created by private organizations, such as J.M.
Brewer's 1934 map of Philadelphia. Private organizations created maps designed
to meet the requirements of the Federal Housing Administration's underwriting
manual. The lenders had to consider FHA standards if they wanted to receive FHA
insurance for their loans. FHA appraisal manuals instructed banks to steer clear
of areas with "inharmonious racial groups", and recommended that
municipalities enact racially restrictive zoning ordinances.

The Fair Housing Act of 1968 was passed to fight the practice of
"red-lining". According to the Department of Housing and Urban
Development:

"The Fair Housing Act makes it unlawful to discriminate in the terms,
conditions, or privileges of sale of a dwelling because of race or national
origin. The Act also makes it unlawful for any person or other entity whose
business includes residential real estate-related transactions to discriminate
against any person in making available such a transaction, or in the terms or
conditions of such a transaction, because of race or national origin."

The Office of Fair Housing and Equal Opportunity was tasked with
administering and enforcing this law. Anyone who suspects that their
neighborhood has been redlined is able to file a housing discrimination
complaint. The Community Reinvestment Act of 1977 further required banks to
apply the same lending criteria in all communities. Although open redlining was
made illegal in the 70s through community reinvestment legislation, the practice
may have continued in less overt ways.

Following a National Housing Conference in 1973, a group of Chicago community
organizations led by The Northwest Community Organization (NCO) formed National
People's Action (NPA), to broaden the fight against disinvestment and mortgage
redlining in neighborhoods all over the country. This organization, led by
Chicago housewife Gale Cincotta and Shel Trapp, a professional community
organizer, targeted The Federal Home Loan Bank Board, the governing authority
over federally chartered Savings & Loan institutions (S&L) that held at
that time the bulk of the country's home mortgages. NPA embarked on an effort to
build a national coalition of urban community organizations to pass a national
disclosure regulation or law to require banks to reveal their lending patterns.

In 1973, when Donald Trump's family’s real-estate company, Trump Management
Corporation, was sued by the Justice Department for alleged racial
discrimination. At the time, Trump was the company’s president.

The case alleged that the Trump Management Corporation had discriminated
against blacks who wished to rent apartments in Brooklyn, Queens and Staten
Island. The government charged the corporation with quoting different rental
terms and conditions to blacks and whites and lying to blacks that apartments
were not available, according to reports of the lawsuit.

Trump responded in characteristic fashion — holding a press conference to
call the charges “absolutely ridiculous.” He told the New York Times: “We
never have discriminated and we never would. There have been a number of local
actions against us and we’ve won them all. We were charged with discrimination
and we proved in court that we did not discriminate.”

For many years, urban community organizations had battled neighborhood decay
by attacking blockbusting, forcing landlords to maintain properties, and
requiring cities to board up and tear down abandoned properties. These actions
addressed the short-term issues of neighborhood decline. Neighborhood leaders
began to learn that these issues and conditions were symptoms of a disinvestment
that was the true, though hidden underlying cause of these problems. They
changed their strategy as more data was gathered.

With the help of NPA, a coalition of loosely affiliated community
organizations began to form. At the Third Annual Housing Conference held in
Chicago in 1974, eight hundred delegates representing 25 states and 35 cities
attended. The strategy focused on the Federal Home Loan Bank Board (FHLBB),
which oversaw S&L's in cities all over the country.

In 1974 Chicago's Metropolitan Area Housing Association (MAHA), made up of
representatives of local organizations, succeeded in having the Illinois State
Legislature pass laws mandating disclosure and outlawing redlining. In
Massachusetts, organizers allied with NPA confronted a unique situation. Over
90% of home mortgages were held by state-chartered savings banks. A Jamaica
Plain neighborhood organization pushed the disinvestment issue into the
statewide gubernatorial race. The Jamaica Plain Banking & Mortgage Committee
and its citywide affiliate, The Boston Anti-redlining Coalition (BARC), won a
commitment from Democratic candidate Michael S. Dukakis to order statewide
disclosure through the Massachusetts State Banking Commission. After Dukakis was
elected, his new Banking Commissioner ordered banks to disclose mortgage-lending
patterns by zip code. The suspected redlining was revealed.

NPA and its affiliates achieved disclosure of lending practices with the
passage of The Home Mortgage Disclosure Act of 1975. The required transparency
and review of loan practices began to change lending practices. NPA began to
work on reinvestment in areas that had been neglected. Their support helped gain
passage in 1977 of the Community Reinvestment Act.

In 1975, two years after Trump was sued by the Justice Department for alleged
racial discrimination, Trump Management settled the case, promising not to
discriminate against blacks, Puerto Ricans and other minorities. As part of the
agreement, Trump was required to send its list of vacancies in its 15,000
apartments to a civil-rights group, giving them first priority in providing
applicants for certain apartments, according to a contemporaneous New York Times
account. Trump, who emphasized that the agreement was not an admission of guilt,
later crowed that he was satisfied because it did not require them to “accept
persons on welfare as tenants unless as qualified as any other tenant.”

But the company was accused of not sufficiently fulfilling its promise,
because three years later [in 1978], the Justice Department charged Trump
Management with continuing to discriminate against blacks through such tactics
as telling them that apartments were not available. As part of its demands, the
government asked that victims of discrimination be compensated and that Trump
Management continue to report to the Justice Department on its compliance.

* Almost 40 years later the Clinton campaign is using this as a case
against Donald Trump for racism.

Comment: During that same period of time when Trump was being sued for
discrimination, as a young lawyer in 1975 Hillary Rodham was appointed to
represent a defendant charged with raping a 12-year-old girl, which ended with a
plea bargain for the defendant after he passed a polygraph test. Years later
Clinton chuckled about this. Not one person has died as a result of Trump
University; but over 500,000 people died in the Iraq war (not including Libya
and Syria). The bankers who support Hillary Clinton have swindled far more
people (especially minorities) than Trump may have ever cheated (or denied
renting to). And Trump's bankruptcies are very common among big corporations
(such as the airlines, etc.); and remember, Clinton voted to bail out the big
banks and auto companies.

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Bud Meyers writes about the economy, politics, Social Security, corporate outsourcing, labor statistics, the REAL unemployment rate, taxes and tax evasion, government and corporate corruption, and the plight of the long-term unemployed.